Cabinet’s July 20 decision to reduce the remittance tax — often criticised for targeting the territory’s poorest residents — got the green light from the House of Assembly on Tuesday.
The amendments to Schedule Three and Section 45A of the Financing and Money Services Act reduce the tax from seven percent to 3.5 percent and also redirect the funds collected to senior citizens, athletes and schools, Premier Dr. Natalio “Sowande” Wheatley said during the HOA debate on an order making the changes effective yesterday.
“We have some noble uses for this particular money to help develop our people,” the premier added.
On Tuesday, Health and Social Development Minister Marlon Penn also spoke in support of the order, claiming that “to add an additional burden to those people, I felt then and now is something that should not have been done, and we have to find more creative and innovative ways to generate revenue in this country.”
Deputy Premier Kye Rymer added, “We have heard the cries of our people pertaining to the seven percent that was originally levied on the money transfer services.”
He also expressed support for the tax eventually reaching zero percent.
On the other hand, Opposition Leader Julian Fraser expressed scepticism about rolling back the tax.
“When you get your hands on money, you don’t give it up unless you have a compelling reason for doing so,” he said.
Original announcement
The premier first announced the plan to halve the tax during a July 22 press conference. He said the move was aimed at easing the burden on struggling residents in the face of soaring inflation.
“While we are collecting revenue, this lower percentage may encourage a greater volume of transactions, and this is in line with what was recommended before this initiative was introduced,” he said at the time.
He added that a large segment of the population sends remittances to support family members around the world.
“These do not only include those persons who have families living abroad that they have an obligation to support, but Virgin Islanders who have children in schools in the United States, in the United Kingdom and elsewhere who send them some dollars periodically to make ends meet,” he said.
At the time, the premier said the necessary actions would take place soon.
“They are actually preparing the order,” he said. “It will have to go to the House of Assembly just to be laid, subjected to a negative resolution in the House. Once it isGazetted, it goes into effectand that can happen anytimebetween now and next week,”he said on July 22.
The order was Gazetted Monday, and took effect yesterday after the HOA approved it.